Dealing with an important new market

 

In the first episode, John Martin, the Sales Manager, persuaded Hector Grant to let him try and open up a new export market in Abraca. Some months have gone by and there have not been any orders from Abraca. Hector Grant is having a look at the quarterly breakdown of overheads detailing actual expenditure against budget. He finds that the amount spent by the Sales Manager on traveling and entertainment is rather high.

However, John Martin has had an enquiry from the Abracan government. He has been asked to give a quotation to supply office furniture for two new government buildings. If the order is placed with them, it will be one of the largest orders the firm has ever received. John Martin has been keeping quiet about it because he wanted to wait until the order was definite, but he has checked with Peter to ensure they have the production capacity to meet the quoted delivery dates. A buyer from the Abracan Ministry of Public Works proposes to visit England to see the factory and negotiate the order. John Martin considers he will have to be suitably entertained: his hotel booked for him, a car put at his disposal, etc. In the letter from the Abracan Ministry there is a curious reference to some 'special requirements'. Hector Grant is astonished to discover what they are.

 

(John Martin is summoned to Hector Grant's office.)

 

JOHN MARTIN: You wanted to see me, H.G.?

HECTOR GRANT: Yes, I did, John. I've just been going through the expenses you incurred on the Abraca trip. We haven't had a single order out of your visit to Abraca.

JOHN: It's a bit early to say, but I don't think the Abracan visit will be fruitless.

GRANT: You went there in October and it's now February and we

haven't heard a thing from them. What's our agent doing out there? Sleeping?

   JOHN: As a matter of fact, I think there may be something moving out there. We've been asked for a quotation for a very large order —office furniture and equipment for two entire government departments.

GRANT: What are the chances of getting this large order? It's only in enquiry, isn't it?

JOHN: No, it's more than that. We've already sent pro forma invoices so that the Ministry of Works can apply to the National Bank for foreign exchange. They want a reduction on our unit price per desk for a larger quantity than we originally quoted for, the price to be CIF Djemsa.

 

                                                                                        

 

 

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GRANT: CIF Djemsa. Two government departments, you said? Well, this sounds more like it.

JOHN: It would be the largest single order in the history of the firm. It's a package deal. We've costed it in detail. It's true we'd be below normal price levels, but we're up against big competition. We have the capacity to produce the order and it'd be in addition to the budgeted turnover for the year, so all recovery on marginal cost would be profit. I'm certain it'll lead to other orders in the country. Here's the letter.

GRANT: “A representative of our Ministry of Works will be coming to London... obliged if you would book him accommodation... glad to visit your factory and view the merchandise… special requirements...” Here what's this about 'special requirements'? What do they mean by that?

JOHN: I don't know, H.G. That's the one mystery. They mentioned it in their original letter of enquiry.

GRANT: I don't much like the sound of that. What do they mean by 'special requirements'? I suppose we'll soon find out. What's the method ofpayment?

JOHN: We require an irrevocable letter of credit, confirmed on a London bank. We've quoted in local currency, and this, of course, is conditional. It's conditional on the rate of exchange which prevails on the date of our quotation not fluctuating more than three per cent either way. So we'd be protected if the Abracan currency, for instance, was devalued in relation to sterling.

GRANT: Hmm! Is Peter happy about delivery dates?

JOHN: Yes, we can meet them. It's meant an immense amount of work in the production planning section.

GRANT: Well, you'll arrange some sort of meeting for us all then? Have you booked their representative into a hotel?

JOHN: Yes, I have, and I think we should provide a car and show him a bit of this country.

GRANT: All right. But you'd better find out more about the special requirements. It may be some condition we can't fulfill, and I don't think...

 

 (Mr. Mahawi the government representative arrives and is entertained royally. His 'special requirements' cause some difficulty. John goes to see Hector Grant.)

 

GRANT: A mahogany desk with built-in cocktail cabinet, secret drawer and radio! Leather top? Oh, really, John, what kind of firm does he think we are? Our business is mass-produced steel office furniture!

JOHN: I said we'd make it. It's for the Minister's personal use. They are prepared to pay. It would be additional to the main contract.

 

 

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GRANT: Don't be ridiculous. We've dropped this sort of line from
our range. That was part of our rationalisation policy.   

JOHN: Couldn't Bob Hardiman make it?

GRANT: That old chap?

JOHN: Yes. He's a master craftsman of the old school. Look at this beautiful desk he made for you. You said at the time we introduced work study, during the productivity drive, that he was redundant. Well, here's a job he can be really useful on, and he'd be delighted to do it. He'd produce a magnificent piece of furniture, it'd be the envy of all the Minister's visitors and a splendid advertisement for us.

GRANT: Well, you have committed us to it, so we must go ahead, I suppose.

 

TERMS IN THE INTRODUCTION

1. quarterly every quarter or three months

 

2. breakdown colloquial term for an analysis of statistics or figures

 

3. overheads overhead expenses incurred in running a business

 

4. budget in accounting, estimate of future needs calculated for a

                   definite period

 

5. quotation the price of goods given to a potential buyer (see also

                    unit 2)

 

TERMS IN THE EPISODE

1. expenses       in general, this means any expenses incurred in running a business. Its more particular common use refers to money spent by an employee on behalf of his firm, which is later refunded. Someone who is frequently outside the office can be said to have an expense account: a salesman, for instance 

 

2. pro forma invoice: a list of goods supplied, with prices and charges
invoice    pro forma invoice: a sample invoice sent to a potential

                    buyer so that he can see clearly what his total costs will    be; also sent in advance to a new client, or one whose references are not satisfactory, informing him that goods will be delivered only on receipt of payment

 

3. CIF          cost, insurance, freight — the price of the goods includes

                 all the charges (shipping, insurance, forwarding) until
                 the goods reach the home port

 

                                                203

 

4. package    this refers to a contract for the bulk sale or buying of a
deal       large variety of goods at a special all-in price, where any

                  particular condition is contingent on all the others being accepted. A typical example of this would be a firm grouping together items of high profit margin with items of low profit margin and letting one subsidise the sale of the other

 

5. costed   to cost means to estimate the price to be charged for an

                 article, based on the expense of producing it.

 

6. turnover the amount of business done, degree of business activity

                  Budgeted turnover: estimated turnover

 

7. marginal marginal costing: is a method of calculating the product
cost           cost after excluding all costs which are unaffected by

                   changes in the volume of output, i.e. fixed costs. Almost synonymous with direct cost (i.e. material and direct labour)

 

8. irrevocable   letter of credit: a foreign buyer transfers money to a
letter of     bank in the exporter's country. This bank then informs
credit       the beneficiary, the person to whom the money is owed,

                    that a sum of money is available when certain documents (e.g. Bill of Lading proving that the goods sold have been loaded on board of  a ship) are presented. Letters of credit are valid only for a certain time, after which they are said to have expired.

                     Irrevocable letter of credit: the arrangement to pay a certain sum of money cannot be changed or revoked Transferable letter of credit: the amount agreed to be paid can be transferred to another person

 

VOCABULARY EXERCISES

I. Give the English equivalents to the following words and expressions:

 

производственные мощности; запрос; расценки; требования; накладные расходы нести расходы; цена за единицу товара; оборот; предусмотренный бюджетом; колебания цен; валюта; уровень цен

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II. Match the words with their definitions:

1) overheads 2)quotation 3) pro forma invoice 4) turnover 5) budget 6) expenses 7) marginal cost

a) the amount of business done, degree of business activity  b) money spent in order to run a business  c) regular and essential expenses such as rent, the cost of telephone, stationery, etc. d) product cost after excluding all fixed costs, i.e. costs unaffected by changes in the volume of output  e) the price of goods given to a potential buyer  f) a sample invoice sent to a potential buyer so that he can see clearly what his total costs will be  g) estimate of future needs calculated for a definite period

                                

 

III. Make sentences of your own using the following words and expressions:

to incur expenses;

package deal;

to book;

to prevail;

to fulfill;

to be devalued

 

IV. Give synonyms or synonymous expressions to the following words and phrases:

1. expenses                                                         

 2. to incur losses                                                                   

 3. goods                                                                               

 4. reduce

 5. to make somebody redundant

 

V. Complete the sentences:

 

  1)John Martin has been keeping quiet, about the order because …………….        

 2) A buyer from the Abracan Ministry of Public Works proposes ……………….     

3) John Martin considers that the buyer will have to be suitably entertained, i.e. ……………………………………………………………………………...   

4) "Special requirements" in the letter meant ……………………………….      

5) Productivity drive in Harper & Grant has led to …………………………

6) The Abracan party sent Harper & Grant the enquiry for …………….

7) As a method of payment John required a(n) …………………………… …

                                                                     

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VI. Translate the following sentences into English:

1) Они просят, чтобы мы снизили среднюю цену за товарную единицу для всей партии товаров.

2) Наши производственные мощности позволяют нам выполнить такой заказ, это даст нам дополнительную продукцию к той, что предусмотрена бюджетом этого года.

3) Фирма сделала специальный заказ на стол из красного дерева, со встроенным коктейль-баром и потайным ящиком.

4) Нaшa фирма получила запрос из Испании, в котором предполагаемые покупатели просят прислать расценки на наше оборудование.

5) Покупатели просят, чтобы мы снизили цену за единицу для партий, которую мы уже котировали. Цена должна включать стоимость, страхование и фрахт до Парижа.

 

COMPREHENSION QUESTIONS

1) Why did John keep quiet about the order form Abraca?

2) What is John going to do to meet the buyer from Abraca?

3) What was the actual situation with the order from Abraca?

4) What method of payment did John ask for? Why?

5) What were the special requirements of the Abracan party?

6) What decision did John take about meeting these requirements?

 

ADDITIONAL EXERCISES